Fast as Can (FAC) – What are the Parameters?
December 7, 2009
Our office has seen a couple of disputes arise under contracts that stipulated laytime as “Fast as Can” (FAC) because on the surface this term appears ambiguous as to which party (the Vessel or Terminal) is responsible for loading/discharging the cargo as fast as possible. Let me explain.
FAC is not commonly used in the bulk liquids trade; rather, laytime allowance is typically fixed basis total hours such as 72 hours per Worldscale or as a volumetric rate, say 125 Metric Tons per Hour (MTPH) or 2,500 Barrels per Hour (BPH), which is then readily converted into laytime by dividing the total cargo volume (inclusive of deadfreight) by the volumetric rate. So, when a contract stipulates “FAC Discharge”, for example, it is not always clearly understood by the parties as to what exactly it means. . .
Although at a glance FAC appears ambiguous, it is in fact clearly defined in Voyage Charters as the “period of time to be calculated by reference to the maximum rate at which the ship in full working order is capable of loading/discharging the cargo.” Additionally, there have been a few disputes decided in New York arbitration that likewise uphold this view. However, keep in mind that every contract is unique and one cannot simply isolate a single term without first considering all the terms of the contract in order to give meaning and effect to the contract as a whole before reaching a conclusion.
In our most recent demurrage case involving FAC, the underlying charter party form was IMOL 78 (a molasses charter) and the laytime allowance clause stipulated “FAC discharge”. Nowhere in the contract did it state that the “FAC terms are governed by the terminal” and IMOL 78 Form Clause 5 expressly stipulates that “Cargo to be received from vessel as fast as she can discharge pumping continuously.” As upheld in N.Y. arbitrations and defined within Voyage Charterers, said clause combined with the express FAC laytime provision directly relates to the maximum rate of the Vessel’s discharge capacity (not the rate at which the terminal can receive).
Although moot relative to the FAC obligation, the vessel in question maintained 100 PSI as required in the Pump Warranty clause which set forth that the vessel is to “maintain a minimum average pumping rate of either 150MTPH against a back pressure of 100 PSI or the maximum rate acceptable by shore facilities, whichever is lower.”
It is noteworth that the FAC obligation and Pump Warranty are not mutually exclusive. FAC pertains to the calculation of laytime allowance, whereas the pump warranty clause in this instance sets forth a minimum at which the Vessel is to pump foregoing which the Owner is liable for overtime, excess quay dues, wharfage, etc.
In this particular case, as supported by the Master’s LOPs, the Vessel was precluded from discharging FAC because the respective terminals provided only 1×10″ cargo hose whereas the Vessel offered 4×12″ manifold connections. Thus, the difference in time basis the Vessel’s discharge capacity relative to the reduced discharge rate experienced due to the terminal constraints was billable as time on demurrage.